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Startup Flees To Seattle Amid Amazon's Tax Fight
An anonymous reader writes "SF-based comparison shopping startup Shopobot was caught in the fight between Amazon, big-box retailers, and politicians over collecting of sales tax for online purchases. So what did the entreprenurs do? Flee to Seattle, right next to Amazon HQ, where marketing affiliates have a chance — because Amazon already collects sales tax in WA." And if you must flee, Seattle's a nice destination.
And in the event of civil uprising in the states, Canada is only 2 hours away.
vos nescitis quicquam, nec cogitatis quia expedit nobis ut unus moriatur homo pro populo et non tota gens pereat.
They don't have a sales tax there, won't ever have to deal with it there.
As a rock-in-roll Physicist once said, No matter where you go, there you are.
Oh yeah, today's Stay Away from Seattle Day. I think /. is trying to subvert this most wondrous of holidays!
No no no... stay away from Seattle. nothing to see here. it rains all the time!. this is not the city you seek. you want...Portland, yeah! Portland is much more friendly and bike-centric and mellow. Seattlites are all hyper-liberal coffee-drinking zombies... save yourself! stay away! ....aaaaieeeee..... [end of transmission]
over taxes and regulation. According to this blog (LOL, only "business relocation coaches" have secure employment in CA) companies leaving CA has increased 5-fold since 2009, an average of 5.4 per week! And Chief Executive magazine has again ranked California last of 50 states to have a business. 14 states have tasked their economic development agencies with luring away California companies tired of high taxes, profuse regulations, and an extortionate legal system. So let's not just make this about Amazon. Everyone is fleeing CA. In fact, WA is not even safe. With the NLRB's overreaching against Boeing, their next move might be to China.
Slashdot "libertarians": Small government for me, big government for those I disagree with. -1, I disagree with you
Businesses are fleeing California for a lot of reasons.
Those that remain may enjoy their fitted sheet mandate as enforced by their mattress police.
Obviously you weren't in Seattle for the months of June, July, August, and September. All we've had are gorgeous sunny days with temperatures between 60 and 85F. Four months of amazing whether and eight months of drizzle and chill is definitely more favorable than the five months of 90F+, 100% humidity BS I moved out of when I left the south.
You know, a few years ago I would have argued with you about that. Then I spent some time up there.
There are plenty of people up there who have problems with our foreign policy, trade agreements (NAFTA is only when it works for the US). Some were a bit confused, and interested, to see that not all Americans fit the "dumb American" stereotype. The US gov't doesn't always play nice with the Canadian government, but you won't hear about that on our side of the fence. Very rarely will you see the whole picture of how others feel about America, until you've lived among them for a while.
Serious? Seriousness is well above my pay grade.
No, no!!! Not Portland! It's always rainy here and there are all of those smelly hippies and hipsters and... well, you saw Portlandia, didn't you? It's just like that. And there are cougars (the feline kind) roaming in the streets (no more cars to run them over now that we have so many bicycles) so you're not safe at all. Stay down there in beatuiful, sunny California. I'd be down there with you, instead of this hell hole, but we don't make enough money up here for us to move there.
That is all.
Look, it's really simple.
Taxing Amazon is unconstitutional on its face, and there is a supreme court decision which is on point that clarifies the issue.
Part of having integrity is supporting what's right even when it's not in your best interest. Yes, California is hurting, we get that. Yes, you need more money, we get that. No, it's not right, deal with it, and no, it's still not right even if you really, *really* need the money.
A better question is whether California really needs the money. Comparing CA with NH:
The CA budget is 9x the NH budget
CA has 28x the population to tax (income taxes)
CA residents have higher income on average than NH residents (income taxes)
CA has 17x the land area to tax (property taxes)
CA has much greater tourist draw than NH (meals and room taxes)
CA has a vast agricultural and industrial base (NAPA valley, Silicon valley) (business taxes)
CA has an enormous coastline which attracts international trade and recreation
NH has... hiking.
If you can't get 9x the revenue from 28x the population, you're doing it wrong.
Here's a thought: How about California just ditch all government infrastructure and duplicate the one in NH, expanded per capita. You would have no income tax, no sales tax, and an operating budget 3x higher.
Source:
http://slashdot.org/comments.pl?sid=2320930&cid=36754362
California
Population: 37M
Population Density: 234/sq mi
Area: 163,696 sq mi (770 miles from top to bottom)
2010-2011 Budget: 102 Billion
Budget per capita: $2756
NH
Population: 1.3M
Population Density: 146/sq mi
Area: 9,304 sq mi ( 190 miles from top to bottom)
2010-2011 Budget: $11.5 billion
Budget per capita: $8846
I can't believe this entire line was precipitated by a fairly innocuous comment.
"Never let your sense of morals prevent you from doing what is right" - Salvor Hardin
Look, California is one of the largest economies in the world for a reason. (Actually, a lot of reasons.)
If you don't want to give back to the state that you do business in, bye bye. You won't be missed. Have fun learning the hard way why nobody else is running a software company in South Carolina or whatever.
Ugly sentiment and dangerous.
At some point you'll wake up and realize that the state needs them more than they need the state. And California is not East Germany. You won't be able to build a wall to keep them in so they can be forced to "give back to the state". They'll leave and they'll be missed.
Oregon has a two-tiered corporate income tax, which tops out at 7.9% of profit over $250k. Web-based services usually have low expenses, so there's not much difference between revenue and profit, making Washington the clear winner.
Hmmm... Not quite. Having run a business in WA, you do pay an effectively hefty B&O tax (it's now at 1.5% for service industries, like resellers). And it's on GROSS receipts - not operating revenue. So every dollar of product or service you sell is hit with this rate - not just your gross profit or operating revenue. Buy a widget for $80 and sell it for $120? You pay 1.5% tax on the $120 - not the $40 of your gross margin. And there are NO deductions for profitability - you can lose money on the deal but you still have to pay the full B&O tax on the gross receipts.
All in all, a B&O tax is about the most unfair version of tax you can get as its strictly on gross receipts/dollars in, with no adjustments offered for expenses or even cost of goods sold. Just straight receipts times your rate and pay up.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
It's actually the grizzlies getting pissed at all the rain and stomping too heavily that triggers the Earthquakes which kick off the volcanoes. So we Washingtonians try to keep the grizzlies happy by feeding them the occasional CA or OR hiker...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Plus the sushi there is fantastic.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
As a native Californian, this "don't let the door hit your ass on the way out" attitude concerns me. Our state has an unemployment rate of 12.1%. Only Nevada is higher at 12.9%. Our state has a serious jobs problem and continuing to encourage businesses to leave will not improve the welfare of our citizens.
Look, California is one of the largest economies in the world for a reason.
Yes, the policies we had decades ago. Be careful, you are looking backwards, and the GP is looking forwards.
If you don't want to give back to the state that you do business in, bye bye. You won't be missed.
Yes, but up to a point. Both you and the GP may be a little overdramatic but the GP does have a point. For example how much of the economic success you refer to is from the aerospace industry? Bad news on that front:
http://washingtonexaminer.com/blogs/examiner-opinion-zone/aerospace-exodus-california
And what of the emerging private space industry that has its roots in Mohave? More bad new:
http://www.signonsandiego.com/news/2011/apr/14/competitors-are-wooing-california-space-industry/
On a personal note I know some guys who used to shape surf boards. Very small scale shop but respected by locals and profitable for years. They had to give it up due to ever increasing regulations.
Have fun learning the hard way why nobody else is running a software company in South Carolina or whatever.
I don't think US customers know or care where a software company is located, except possibly that it is a US operation. And with the increasing popularity of the digital supply chain -- developer to online store to consumer, no packaged goods or distributors -- this is becoming even more so.
You have to admit the California legislature is out of control and making California a less friendly place to do business than a few decades ago.
Look, California is one of the largest economies in the world for a reason. (Actually, a lot of reasons.)
If you don't want to give back to the state that you do business in, bye bye. You won't be missed. Have fun learning the hard way why nobody else is running a software company in South Carolina or whatever.
Thing is, you need to look for a middle ground there.
Yes, businesses (and citizens) should pay taxes in their state and country of residence. And yes, successful economies are generally not the ones which have ultra-low taxes, at least not in long-term - you can make a market "efficient" that way, but it does not contribute to a healthy society.
On the other hand, taxation should be fair. Taxes are not some kind of magic coffer where the state should reach into every time it runs out of money doing stuff - even if it seems like it's useful stuff. Furthermore, it's also most certainly possible to drive businesses away by setting the tax burden too high, and then you suddenly find out that, even though your tax rate is through the roof, the magic coffer is empty, because the leprechauns that were filling it are gone.
Laffer curve is a real thing, and applies outside of the Austrian economic school (even if those guys love to mention it every time they demand lower taxes - but that's not what it actually is about). Ignoring it when defining your economic policy is actively harmful to yourself, and this is true regardless of your political affiliation (unless you believe in abolishing all property altogether).
New Hampshire has one of the lowest overall tax burdens. Sometimes *the* lowest, depending on the year.
California has one of the highest overall tax burdens - 7th in the nation. (Varies, depending on the year and source)
We raise 3.2x as much money per person than California, while taxing each person much less.
Here's how we do it:
1) We have a hefty property tax. Unlike income and sales taxes, property tax is largely immune to economic swings. When the economy goes up, you pay X. When the economy goes down, you pay X. (Housing values are checked every 10 years or so.)
Basing your revenues on income, sales, and business taxes is a recipe for disaster. You'll always be in "feast or famine" mode, always be flush during the good years and in pain during the bad.
2) The property tax is simple: your house is worth this, you pay that. There is only one point of contention (the value of your house), so collection and enforcement is easy and straightforward. So is contesting the tax - there's only one point to argue: the value of the house.
Income, sales, and business taxes are complicated and require resources for collection and compliance. There are a ton of options, laws, and special rules that require coding, dissemination, interpretation, defense, and so on. All of this adds cost.
The added cost is mirrored in the public as well - the expenses you incur to force compliance are mirrored by similar expenses made by the public. If you audit someone because they took a bad deduction, they have to spend time, effort, and money defending themselves. That's time and money they don't spend productively - it drags down the economy.
The expense of collection and enforcement has a resonating effect as well. If the enforcement branch gets rid of a CPA paid $100,000, not only do they take an immediate $100,000 cost reduction, but the CPA will now pay taxes on wages earned in the private sector. Simple government gets you much more than the base cost comparison will show.
If you could simplify your taxes, the net gain to the state would be enormous.
3) We have one "per person" tax, you have three (income, sales, property).
Consider a tax which requires 40% of the income for collection and enforcement (ie - for every $100 taken in, $40 goes to the revenue department to pay for collection and enforcement). All else being equal, double the *number* of taxes and you double the income. Double the *rate* and you more than double the income.
In the previous example, if $40 is spent on collection you get $60 for revenue. If you double the taxes, you get $120 revenue. If you double the *rate*, you get $160 in revenue.
I could go on, but it's pretty simple from an economic point of view.
California revenue is a twisted tangle of expensive administrative policy which is inefficient and unproductive. They tax their citizens more, but get less revenue.
NH has a simpler system that is less burdensome, requires less government, and nets the state more income.
So seriously.. What is your state doing to attract and retain businesses and jobs?
High unemployment and businesses leaving for greener pastures is not the problem. The problem is the pasture is no longer green there.
California has become one of the most liberal states with fantastic benifits. The side effect is budget problems when the economy is not so great. Raising taxes instead of cutting entitlements has caused the problem.
Again, I ask, what is California doing to attract and retain businesses? We know why they are leaving. They have publicly stated why they left. It is not a secret.
I don't live in California because the cost of living is way too high.
The truth shall set you free!